There’s a common refrain among small business owners in Vancouver: Even the popular ones can’t seem to sell enough tomatoes, pour enough pints or cut enough hair to keep up with the rising cost of just existing in the city.

Tuesdays’ property taxes were $30,963 for 2017, a 24 per cent increase over just a few years earlier. The business has added new services in recent years to boost sales, but the steady escalation of property taxes make it harder every year to keep the business viable.

“It’s a killer,” said Wener. “They don’t seem to understand what they’re doing to small businesses.”

Like most independent business owners in Metro Vancouver, Wener pays a triple-net lease to his landlord, meaning he pays rent, maintenance fees and property taxes. While rent is expensive in Vancouver, it’s the property taxes, in particular, that have been killing local businesses lately.

The 1100 block of Robson Street has several vacant storefronts.Francis Georgian /
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Recently, as many beloved businesses around Metro Vancouver have shuttered, some have seen eye-popping year-over-year property tax hikes. Last week, Postmedia’s Cheryl Chan reported that a long-running Burnaby grocer facing a 37 per cent hike in their lease obligations — largely due to rising property values and taxes passed onto the business owners — may be forced to close.

But Wener’s situation is more commonplace, and more representative of what Vancouver’s small businesses face — and it’s why, for years, their advocates have claimed the property tax system is unfairly rigged against them. Now, with Vancouver’s new mayor and council, many of those advocates are optimistic 2019 could be the year businesses finally see some measure of property tax relief.

In December, during council discussion on the City of Vancouver’s 2019 budget, council voted to direct city staff to explore a property tax shift of two per cent from commercial to non-commercial, “with the goal of supporting small business and retail.”

Staff was directed to report back by April 2019, “regarding the opportunity and impact of a 2 per cent tax shift.” That means that after the April report to council, if council decides to make a shift, the new rates would be reflected on the July 2019 tax bill, the City of Vancouver’s chief financial officer, Patrice Impey, said in an email.

Vancouver has long had the highest ratio of commercial-to-residential tax rates of any Canadian municipality in the annual report compiled by Altus Group, a global real estate consultancy. Vancouver topped the list again last year in Altus Group’s Canadian Property Tax Rate Benchmark Report, with the city’s ratio of 4.4 more than 50 per cent above the national average.

Despite pleas from small businesses, Vancouver hasn’t made any shifts to the tax burden since 2012.

That’s an issue, the Altus Group report says, because high commercial property taxes place a greater weight on businesses to contribute an inequitable share of municipal budgets.

“While every homeowner would appreciate paying less property tax, it is important to balance the burden paid by businesses in each city,” the Altus report said. “Lower commercial property taxes help make cities more competitive, promote job growth and investment, and subsequently generate more stable and sustainable revenue.”

Wener acknowledges the difficult situation that council faces.

“How do you shift the taxes to the residents, when they’re already getting creamed?” Wener said, adding that the underlying issue is the city must slow the growth of its ever-expanding operating budget.

If Vancouver’s council does reduce the commercial tax rate, that would, of course, require the city to get the money somewhere else.

“But with the current environment in the city, if they don’t do these shifts, we’re going to continue to see the trend of older businesses shutting down,” he said.

Asked if he thinks Vancouver’s mayor and council will move to provide tax relief for businesses, Gertsman said he’s cautiously optimistic.

“The last few years, I would have been quite skeptical, but currently, I think there’s a greater than 50 per cent probability,” he said. “Because so many of the councillors were aligned in the lead-up to the election, I don’t think it would reflect well to turn their back on small businesses, immediately after being elected.”

“It’s always a little bit easier to do this in the first year of a mandate than in the last year,” Gertsman said. “And it doesn’t hurt to have some new faces who made some pretty fresh promises.”

Paul Sullivan, a senior partner at Burgess, Cawley, Sullivan & Associates who has consulted with the Vancouver government on property tax issues, thinks “there’s an extremely high possibility” of a shift.

“We’re fresh off an election, and just about every councillor and, in particular, (Mayor) Kennedy Stewart said: ‘I’m going to work on the small business tax problem,’” Sullivan said. “I think there’s a lot of heat under these guys to do the right thing.”

A two per cent shift in the tax burden from commercial to residential would not, on its own, solve the challenges faced by Vancouver small businesses. Sullivan and Gertsman agree the civic and provincial governments should take other steps, particularly to address the massive year-over-year property tax increases sometimes produced in the current system of assessing properties based on their “highest and best use,” that is the maximum development that zoning would allow on the site.

“There’s other things that need to be done,” said Amy Robinson, executive director of LOCO B.C., an organization representing independent businesses. “But we were really looking for this (two per cent shift) as a bit of a symbolic gesture, to ease the burden immediately as a first step.”

“But do they want to pay for it?” Robinson asked. “That’s something we’re going to have to face as citizens of Vancouver: What do we value? Are we willing to see the loss of all those businesses, and the homogenization of the business community, and empty storefronts? And the loss of essential services, just to save $40 or $80 a year on our (residential) property tax bill?”

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